Many investments are now available for as little as a few dozen euros, allowing you to invest with little money. A very modest budget is enough to patiently build up emergency savings and make them grow over the years.
How to make money with little investment? What are the most recommended investments in 2022 for savers with limited resources? Crédit Astucieux offers you a comprehensive overview of the best options to consider.
INVESTING WITH LITTLE MONEY: THE 3 GOLDEN RULES
Before investing a small amount for the first time , it is essential to follow a number of precautions and basic rules:
INVEST MONEY YOU DON’T NEED IMMEDIATELY
Some financial investments, such as regulated savings accounts, are completely ” liquid .” This means you can withdraw your funds at any time, most often via instant transfer. However, this is not the case for most financial products: you must remain invested for a minimum period of time, or risk being subject to prohibitive taxation.
This is why you should always limit your investments to money you can live without at the moment. This will prevent you from withdrawing your savings in a hurry if something bad happens!
ONLY INVEST IN PRODUCTS YOU UNDERSTAND
There’s no need to overcomplicate things, especially if you’re investing with a limited portfolio… Each financial product has its own operating rules. It’s imperative to understand them well before investing your savings in them. Ask yourself a few basic questions:
Where does the money go : what type of activity or field will it be used to finance?
What is the risk level: Is the capital guaranteed or could you be exposed to a capital loss? If you’re interested in the stock market, many brokers offer a risk level classification for each security for greater transparency.
What are the withdrawal conditions: can you withdraw your funds at any time, or are they blocked for a certain period?
A quick knowledge test can be useful if you are considering a rental investment or buying shares, for example.
DIVERSIFY YOUR INVESTMENTS
How to make money with little investment? First, be careful not to put all your eggs in one basket! It’s recommended to diversify your investments, even if you’re only investing a few hundred euros. This will help you develop the best reflexes right away, and then weight your investments according to their respective performances
Always keep a small amount of savings as a precaution , even if it doesn’t earn you much. This emergency fund can help you in case of a problem! This way, you won’t have to liquidate your investments in the longer term. It is recommended to keep the equivalent of 3 to 6 months of household expenses in a savings account .
WHERE TO INVEST WITH LITTLE MONEY?
There are many investment opportunities, even on a budget. Below are the best ways to gain purchasing power with little investment.
INVESTING IN THE STOCK MARKET
Contrary to popular belief, you don’t need a fortune to make money on the stock market. You can buy a single share if you wish! Most stocks trade for a few dozen euros. This can be enough to gradually build up a nest egg.
Stock prices, by definition, are highly volatile . This means they can fluctuate dramatically, either up or down, in a short period of time.
Don’t panic! Over the long term, most major stock indices follow an upward trend. By being patient and resisting pressure, you will eventually come out ahead. This is why the stock market should only be considered a long-term investment , not a speculative activity.
There are several strategies you can consider for investing in the stock market with little money:
Targeted stock buying . This involves investing only in a specific company. In this case, it is necessary to have sufficient funds to diversify among at least ten companies specializing in different sectors (energy, banking, food, health, etc.).
Buying trackers or “ ETFs ” ( exchange-traded funds ) is a strategy for many small investors. It allows you to invest, in a single transaction, in a large basket of stocks. You can, for example, buy the entire CAC 40 via a CAC 40 ETF, or even invest in all the world’s stock markets via a “ World ” tracker. In addition, the management fees for these funds are generally very low.
Investing in stock market derivatives is a common temptation, but it’s not recommended for beginners. Options, puts , and futures are complex, and above all, they carry a very high risk, with losses that can exceed your initial investment!
If you’re interested in investing in the stock market, consider opening a stock savings plan (PEA) as soon as possible! An initial deposit of 10 euros is sufficient. The PEA is superior to a regular securities account due to its tax advantages. After five years of operation, withdrawals are fully exempt from income tax: only social security contributions of 17.20% will continue to apply to your earnings.
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